Amazon are to impose a 2% fee for Seller Fulfilled Prime orders in the US, from the 1st of October, according to Bloomberg.
Seller Fulfilled Prime is a half way house between FBA (Fulfilment by Amazon) and MFN (Merchant Fulfilled Network). With the former, retailers ship their products to Amazon who fulfil orders from their own warehouse. With the later, merchants keep the stock at their own facility (or alternative 3PL) and ship orders themselves when they get an order on Amazon.
Seller Fulfilled Prime is for sellers who have proven their ability to meet Prime standards of service, so it’s MFN but comes with the search visibility you’d expect to get from FBA.
2% is a pretty steep penalty for shipping your own orders, it’s 2% of the sale prices so in most cases will be a significantly higher percentage of margin. With Amazon fees of around 8-15%, plus perhaps advertising fees with Sponsored Products or Sponsored Brands on top, another 2% makes Amazon a very expensive route to market if you’re using Seller Fulfilled Prime.
We’d expect a fair number of sellers to fall in line, but not the way Amazon perhaps hopes by using FBA, it’s much more likely that they’ll stick two fingers up to Seller Fulfilled Prime and migrate to the MFN style of working. Sure there’s some potential downside in search visibility, but sellers who took the decision that they want to retain control of their stock will probably in the main decide that control is more important than a loss in sales, or paying the 2% fine for fulfilling their own orders.
It’s worth remembering that Seller Fulfilled Prime eligibility, so these sellers have already jumped through Amazon’s hoops to qualify and continue to provide sterling service to retain membership of the programme.
Although Seller Fulfilled Prime has been around in the US since 2015, enrolment closed with Amazon announcing a couple of months ago that enrolment would reopen this year.
As the program grew, we unfortunately realized that SFP was not providing the same high-quality experience that customers expect from Prime. As a result, we paused new seller enrollment while we worked to make sure we had more support for sellers and clear standards in place for the SFP program to ensure it provides customers a great Prime experience. We appreciate the sellers that have helped us work through this, and we are excited to be at the point where we will soon reopen enrollment.
We will update you in the coming months with enrollment details and updated requirements to ensure that it meets Prime customers’ high expectations. We look forward to the improved customer experience that these changes will bring.– Amazon
It’s likely that most interested retailers that were awaiting a Seller Fulfilled Prime invite will be reconsidering their options in light of the new fee.